In the case of forged indorsements and alterations,
and for forged indorsements or alterations on the first party to take
(46) It is clear that "whoever has rights to the note also has rights to the mortgage method of enforcing the note (i.e., foreclosure)." (47) Under the amended version of UCC Article 3, there is no question that indorsement of the promissory note requires physical delivery of the note to the new owner of the mortgage.
The underlying question addressed here is whether under New York law, an assignee of a mortgage loan obligation has standing to foreclose on a defaulting borrower when the assignee has not received both indorsement and physical possession of the promissory note.
While indorsement amounted to a weakening of finality, paying a debt by indorsing someone else's debt still represented an improvement over simple credit chains.
Indorsement served to limit the scope for buyer-side fraud, that is, fraud that would result from a buyer passing on a low-quality or forged debt instrument to a seller.
This means that even if the indorsement and delivery did not occur, the trust would still have standing to foreclose.
If so, then the trust cannot enforce the notes unless it is a person entitled to enforce under Article 3, which, in most cases, requires indorsement and delivery.
The plaintiff filed the original note, which showed an indorsement to another person, but no indorsement to the plaintiff.
[section] 673.2041(1) (2010), defining "indorsement." Fla.
In the case of UCC Article 3, this means that the use of integrated, formalized writings transferred through indorsement and physical delivery and enforced via presentment.
(63) If an instrument is payable to (or to the order of) an identified person, however, then the negotiation requires not just delivery, but also indorsement by the prior holder.